Chinese chip stocks jump as Beijing reportedly warns against Nvidia’s H20
JPMorgan raised its price target on Oracle (NYSE:ORCL) to $185.00 from $135.00 on Thursday, while maintaining a Neutral rating on the stock. The adjustment follows Oracle’s fiscal fourth-quarter results that showed total revenue growth of 11% in both U.S. dollars and constant currency, exceeding Wall Street’s consensus expectations of 9%. With a current market capitalization of $495 billion and trading at a P/E ratio of 40.4x, InvestingPro analysis suggests the stock is trading above its Fair Value, joining other overvalued tech stocks tracked on the Most Overvalued list.
The company’s cloud business continues to show strong momentum, with total cloud revenue growing 27% in constant currency during the quarter. Oracle’s cloud infrastructure revenue grew 62% as demand "dramatically outstrips supply," according to the company. JPMorgan noted that while reported remaining performance obligations (RPO) growth decelerated from 62% year-over-year in Q3 to 41% in Q4, management provided bullish commentary on future RPO growth. The company’s overall revenue reached $55.8 billion in the last twelve months, with an impressive gross profit margin of 71.1%. InvestingPro subscribers can access 12+ additional key metrics and insights about Oracle’s cloud business performance.
Oracle issued fiscal year 2026 revenue guidance of at least $67 billion, representing 16% growth in constant currency, above the previous target of $66 billion announced in September 2024. The company expects its cloud infrastructure revenue to grow over 70% in fiscal 2026, surpassing Street consensus of approximately 60%, and projects total RPO to grow more than 100% during the year.
Capital expenditure guidance for fiscal 2026 came in at $25 billion, approximately 25% above analyst expectations of $20 billion. The company indicated it is not experiencing any challenges procuring GPUs and emphasized it is only building capacity when it has firm orders. JPMorgan noted this substantial increase in capital expenditures will largely eliminate positive free cash flow Oracle would have otherwise produced.
JPMorgan’s analysis suggests positive investor sentiment will likely continue as long as Oracle’s cloud infrastructure growth outpaces major competitors, despite margin degradation and disruption to free cash flow. The firm shifted its valuation basis from unlevered free cash flow to GAAP operating income, which mechanically drove the price target higher despite maintaining a Neutral stance on the stock. The stock has delivered a strong 27% return over the past year, with InvestingPro data showing analyst price targets ranging from $130 to $246, reflecting diverse views on Oracle’s growth trajectory. For comprehensive analysis, investors can access Oracle’s detailed Pro Research Report, part of InvestingPro’s coverage of 1,400+ US equities.
In other recent news, Oracle reported fourth-quarter revenue of $15.9 billion, marking an 11% year-over-year growth and surpassing expectations. The company’s earnings per share reached $1.70, exceeding analyst predictions, and its Infrastructure as a Service (IaaS) segment saw a 52% growth. Oracle’s fiscal 2026 revenue guidance was raised to over $67 billion, indicating a 16% growth in constant currency. The company projects its cloud revenue to grow by 40% and IaaS by 70% in fiscal year 2026. Wolfe Research, Evercore ISI, and Jefferies all increased their price targets for Oracle, with Wolfe and Evercore setting it at $215, and Jefferies at $220, citing strong revenue performance and growth targets. Stifel also raised its price target to $180, noting the company’s cloud growth, while Citizens JMP increased its target to $240 due to better-than-expected quarterly results. Despite mixed quarterly performance noted by Jefferies, the firm maintained a Buy rating, highlighting confidence in Oracle’s future prospects. Oracle’s remaining performance obligations reached $138 billion, up 41% year-over-year, with expectations to grow over 100% by fiscal 2026.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.